Trading Lessons ALL Beginners Need To Learn ASAP (INSTANT Results)
Summary
TLDRThe video script emphasizes the importance of self-awareness and discipline in trading. It highlights the difference between explicit and implicit learning, with a focus on the latter being crucial for trading success. The speaker shares personal experiences, such as understanding market conditions, managing stop losses dynamically, and the pitfalls of emotional trading. They stress the value of a well-thought-out trading plan, realistic profit targets, and the need to recognize and manage psychological biases. The script also underscores the significance of taking breaks to maintain mental well-being and avoid poor decision-making in trading.
Takeaways
- 📈 Awareness of daily mistakes and habits can significantly reduce trading losses.
- 📚 Learning to trade is more about hands-on experience (implicit learning) than just reading (explicit learning).
- 🔍 Identifying your strengths and weaknesses in different market conditions is crucial for successful trading.
- 🚫 Avoid forcing trades in choppy or unclear market conditions to prevent unnecessary losses.
- 📊 Use the Average True Range (ATR) indicator to set dynamic stop-loss levels instead of fixed pip values.
- 🔄 Move your stop-loss to break-even only after the market confirms your initial analysis.
- 🏆 Hold onto winning trades and resist the urge to close them early due to fear of losing profits.
- 🔗 Understand market correlations to avoid doubling risk in correlated trades.
- 🔧 Start with conservative leverage and only increase it once consistent profitability is achieved.
- 📝 Use a pre-trade checklist to ensure disciplined adherence to your trading strategy.
- 🎯 Set realistic profit targets based on market structure and avoid overly ambitious take-profit levels.
Q & A
What is the key to preventing losses in trading according to the speaker?
-The key to preventing losses is becoming more aware of daily mistakes and eliminating bad habits.
What are the two types of learning mentioned in the script?
-The two types of learning mentioned are explicit, which involves reading and studying, and implicit, which involves learning through actual experience.
Why did the speaker initially struggle with trading despite reading many books?
-The speaker struggled because trading is more about implicit learning, which comes from doing, rather than explicit learning from books.
What is the importance of understanding your own trading style according to the speaker?
-Understanding your own trading style is crucial for knowing which market conditions you perform well in and which ones are yourryptonite, allowing you to trade more effectively.
What did the speaker learn about setting stop losses in trading?
-The speaker learned that setting fixed stop losses doesn't account for market volatility and instead, using dynamic stop-loss levels based on the average true range (ATR) is more effective.
Why is it a mistake to move stop losses to break even too early in a trade, as per the speaker's experience?
-Moving stop losses to break even too early can result in exiting trades prematurely, missing out on potential profits, as the market may still be in line with your initial analysis.
How does the speaker address the challenge of holding onto winning trades?
-The speaker suggests asking oneself if there is an actual technical reason to exit or if it's just fear driving the decision, and emphasizes the importance of maintaining a level head.
What is the speaker's advice on using leverage in trading?
-The speaker advises starting conservatively with no more than 2:1 leverage, keeping position sizes small until consistent profitability is achieved, and only then considering higher leverage.
Why did the speaker start using a checklist before entering trades?
-The speaker used a checklist to enforce discipline, remove subjective emotions from trading decisions, and ensure that every trade met specific criteria based on their strategy.
What is the speaker's approach to setting profit targets in trading?
-The speaker recommends setting realistic and achievable profit targets based on market structure, such as nearby supply and demand levels or using the ATR to assist with typical daily ranges.
How does the speaker manage their emotions and psychological biases in trading?
-The speaker recognizes their own biases, such as the fear of being wrong or missing out, and takes breaks from trading when necessary to maintain mental well-being and clear decision-making.
Outlines
📚 Learning from Mistakes in Trading
The speaker emphasizes the importance of awareness in preventing losses, suggesting that small adjustments can significantly improve trading performance. They share their initial approach to trading, which involved extensive reading and learning strategies, but found that practical experience was more crucial. The distinction between explicit (theoretical) and implicit (practical) learning is highlighted, with the latter being more applicable to trading. The speaker also discusses the importance of understanding one's strengths and weaknesses in different market conditions and avoiding trades that don't align with one's expertise.
🔄 Moving Stop Losses and Managing Risk
The speaker talks about the evolution of their stop-loss strategy, moving from fixed stop losses to dynamic ones based on the average true range (ATR) indicator. They stress the importance of waiting for a clear market signal before moving a stop loss to break-even. The challenge of holding onto winning trades is addressed, with the speaker sharing their struggle to resist the urge to close profitable positions early. They also discuss the dangers of correlated positions and the importance of understanding market correlations to avoid excessive risk. The speaker's experience with leverage is shared, highlighting the need for conservative use and the development of a disciplined trading approach.
📈 Setting Realistic Profit Targets and Emotional Control
The speaker advises on setting realistic profit targets based on market structure and personal trading strategy, rather than aiming for high targets that may not be achievable. They discuss the benefits of taking multiple smaller profits over fewer larger ones for consistency in trading. The importance of understanding and managing emotions and psychological biases in trading is emphasized, with the speaker sharing their personal experiences with fear of being wrong and fear of missing out (FOMO). The speaker also highlights the value of taking breaks from trading when necessary to maintain mental well-being and make better decisions.
Mindmap
Keywords
💡Awareness
💡Explicit and Implicit Learning
💡Market Conditions
💡Stop Loss
💡Average True Range (ATR)
💡Risk Management
💡Leverage
💡Checklist
💡Profit Targets
💡Emotional Control
💡Taking a Break
Highlights
80% of trading losses can be prevented by being more aware of daily mistakes and bad habits.
Explicit learning is about reading and studying, while implicit learning comes from doing and experience.
Trading is more about implicit learning through experience rather than just reading about strategies.
Consistent trading involves understanding your own strengths and weaknesses in market conditions.
It's important to identify and avoid market conditions that are not favorable for your trading style.
Fixed stop losses may not account for market volatility; dynamic stop losses based on ATR are more effective.
Moving stop losses to break even should be based on market signals confirming your analysis.
Holding on to winning trades is challenging due to the fear of losing profits.
Understanding market correlations is crucial to avoid doubling risk in correlated positions.
Leverage can be a double-edged sword; it's important to use it conservatively when starting out.
Having a trading checklist helps in maintaining discipline and avoiding emotional decisions.
Setting realistic profit targets based on market structure is more effective than aiming for high targets.
Consistency in trading is more valuable than occasional big wins.
Recognizing and managing psychological biases and emotions is crucial for trading success.
Taking breaks from trading can help in regaining focus and mental clarity.
Transcripts
80% of your losses can be prevented if
you become more aware of your daily
mistakes and the little things that hold
you back just imagine how your account
would look like if you'd make those
small tweaks and eliminate those bad
habits you have here's what I've done to
reinvent myself as a
Trader when I first started trading I
tried to learn everything I could
through Reading lots of books I thought
that was the key if I just learn all the
strategies and techniques I'd be able to
make profitable trades but no matter how
much I read it never really clicked for
me in life markets it wasn't until much
later that I realized there are two
different types of learning explicit and
implicit explicit is reading about stuff
in textbooks while implicit is learning
through actually doing it over and over
and trading is way more of an impl bit
learning process than an explicit one
you can study patterns indicators and
theories all you want but nothing
teaches you like experience in life
Market it's all about recognizing
opportunities trading books and trading
videos like this one are most helpful
for introductions to New Concepts new
knowledge but what really improves your
skill is putting in the time at your
screen every trait imprints a lesson in
your subconscious understand ending
without that Hands-On practice the
explicit stuff can only take you so
far being a consistent Trader means
knowing your own game what type of
Market moves do you excel at reading are
you better trading breakouts do you
perform better when the markets are
quiet or when there's lots of movement I
had to learn this the hard way when I
first started I'd Force trades any time
time the price ticked up or down
regardless of what was really happening
I wasn't paying attention to the
previous price action during that day so
during choppy days with no clear
patterns I'd get stopped out with every
little wiggle more often than not I'd
end the day in Red without even
realizing why the key is being aware of
what types of market conditions you
perform well in and which ones are your
cryptonite when the conditions are in
your favor
that's when you absolutely got to be on
your aame but if the price action is
catchy and you get that feeling in your
gut that you're going to struggle you
just walk away it's also crucial that
you take some time to analyze what
exactly disturbs you is it Choy low
volume gaps fake outs ranges fast price
movement pinpointing your weakness is
half the battle of learning to overcome
them so pay attention to the different
market conditions and only trade what
you
[Music]
understand when I first started trading
I thought the way to do it was to just
set my stop loss 30 bips below my entry
on every trade that way it would be
simple right well this strategy didn't
work out so well for me after losing way
more trades than I was winning I soon
realized that the markets don't move in
a nice predictable way during 1 hour
they jump around a lot in a short period
and the next one they barely move at all
so setting those fixed stop losses
didn't account for the natural
volatility of the market that's when I
started using the average true range or
the at this indicator shows you on
average how far the market has been
moving each day recently seeing that
helped me understand why just using a
fixed number of Pips wasn't a good
approach because different markets and
time periods have different levels of
volatility so now when I take a trade I
look at the ATR and use it to help me
determine a dynamic stop- loss level
rather than a fixed one I also pay
attention to important price points like
round numbers moving averages view up
that could act as support or resistance
that gives me more flexibility to avoid
unnecessary losses from normal Market
fluctuations
another important topic when to move
your stop loss to break even on the
surface it seems logical once you're no
longer at risk of losing why wouldn't
you lock that in in the past I made a
mistake all the time of adjusting my
stops too early before the market had
really proven itself all I was doing was
taking the risk of the table but I also
kept my upside potential to soon I'd get
stopped out of Trades that kept running
now I only try to move my stop to break
even once the market gives me a clear
sign that my initial analysis was right
for example if the price tries to deep
back down to my entry point but fails
that tells me my thesis is still valid
or if it makes a higher high or a lower
low confirming my Trend the key is
waiting for strategic level s not
arbitrary ones psychologically it feels
good to be risk-free but statistically
it affects your profits long
term something that is still a real
struggle for me is holding on to winning
traits you hear it a lot cut your losses
and let the winners write it seems so
simple but it's so hard to fight that
urge to close out a position early you
know the feeling when you place a trade
and things are going great as your
position goes in profit immediately and
then the market starts to turn around a
bit and you can feel yourself getting
nervous your hands are then drifting
over the close botton just waiting for
the smallest reason to exit and most of
the time you exit it's because you are
scared of giving back those profits
you've gained so far but most of the
time if you took an objective look at
the charts nothing really changed from a
technical perspective the move was still
intact but you settled for a small
profit and here comes the worst part the
market keeps going like you previously
expected you let your emotions get the
best of you and you've missed out on way
more profit potential it's a common
thing in trading and a really valuable
lesson about keeping a level head this
is one of my biggest struggles even
after so many years of trading when I
feel that that Panic is starting to
settle in on OPP position I ask myself a
simple question is there an actual
technical reason to exit or I'm just
scared nine times out of 10 it's just
fear
talking something I've really been
focusing on lately is understanding
correlations between different markets I
might want to trade let me give you an
example let's say there's a bullish
pattern setting up on the pound dollar
pair and you take a long position at the
same time pound yen is also showing
signs of strength since they both
involved the British pound you might
think great I'll double up by going long
on both big mistake as you didn't
properly account for how close the pound
Bears tend to move together so if the
pound suddenly pulls back it will
trigger losses on both traits at the
same time your risk is doubled due to
those correlated positions be very
careful about your exposure before
entering multiple traits analyze how the
under Lings typically interact are they
usually in sync like the pound paars or
do they have a history of Divergence at
times knowing the correlations will help
you avoid stacking on too much risk in
One
Direction leverage can be a real double
edge sword for tra ERS especially when
you're starting out I definitely learned
that the hard way when I first got
access to leverage it was super exciting
because I thought great now I have way
more money to place bigger trades and
make bigger profits the result within a
few weeks I had blown out my entire
small account the problem was that while
I was making money on some trades one or
two losses totally wiped me out because
my position sizes were pumped up way too
big with a ridiculous leverage of 500 to
one a small move against me wiped out
days of wins it was a really expensive
lesson using leverage safely takes
experience I always stress starting very
conservatively no more than two or 5 to
one leverage at most keep position size
as small until you can prove you can be
consistently profitable leverage can
come later once good risk habits are
formed as I started to take trading
seriously I realized having a lose plan
in my head just wasn't cutting in I was
too willing to bend the rules if I
really wanted to take a trade that's
when I started writing out a checklist
of everything I look for before entering
a position now before every trade I go
through it Point by point is the chart
set up right price action looking how I
want indicators aligned Supply or demand
respected it forces me to slow down and
really analyze objectively I found it so
valuable because it takes the subjective
emotions out there's no room for
ambiguous decisions either the tradeit
hits all the boxes or it's a nogo and
having it written out makes it very
clear if I'm about to break my own rules
the checklist has done one thirst for my
discipline now I avoid so many traits
now that I know deep down they aren't
high probability based on my
strategy when it comes to setting profit
targets I see a lot of Traders make the
mistake of aiming way too high without
really thinking it through I did in the
same way I'd enter a trade and slap on
some ridiculous takeprofit level 100
Pips away thinking the bigger the target
the better well the result my win rate
decreased a lot you need to have
realistic achievable targets based on
actual Market structure things like
nearby supply and demand levels that
could reasonably stop a move or using
the ATR to assist the typical daily
ranges and taking partial profits within
that band the key is setting targets
that balance probability of success with
adequate reward I'd rather have five
winning trades at 20 Pips each than one
out of five going for 100 Pips is not as
sexy aiming for a few Pips but it's way
more consistent in the long run
consistency trumps occasional big wins
every single
time understanding your emotions and
psychological biases is so important in
trading we all have fears that can
affect our success if left unchecked we
all have inner trading demons a big one
for me was the fear of being wrong I had
second guess winning trads because I was
worried I might miss something or I'd
hold on to losers trying to be right
another struggle is the fear of missing
out feeling like I had to jump in a move
whether my strategy is set to or not I
also used to bail early on WIS due to
warries St reverse managing ego is
another one recognizing your patterns
early is key find out what are your own
biases and what can you do to diminish
their influence on your
trading and sometimes taking a break is
the best move at the beginning of last
year no matter what trade I put on I
seem to pick the wrong side every single
time and it was getting frustrating
watching my profit is decreasing and my
mind wasn't as sharp as usual I started
questioning every decision and second
guessing myself I needed to step aside
as much as it pained me to leave the
action I knew staying in this mental
state would only lead to more bad
decisions and losses I had to clear my
head so I decided to take a break no
charts no books no trading apps no
videos for 2 weeks and it wasn't at
first I really missed the excitement and
the rush of placing a trait but it was
the time to refocus after that period I
was ready to get back in the game and
with a cool head I came up with some
minor adjustments to my strategies
taking breaks from Trading is absolutely
necessary when things don't go as
planned the markets will always be there
it's more important we take care of our
mental
well-being
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